ADVERTISING
KEY CONCEPTS
The Effects of Advertising
 U.S. advertising was almost $300 billion in 2006
 In 2005, 32 companies spent over $1 billion each
 The advertising industry is small—only 155,000 employed by
the 12,000 advertising agencies
 Ad budgets of some firms are almost $4 billion annually
The Effects of Advertising
Top Ten
Leaders
by U.S.
Advertising
Spending
Advertising and Market Share
New brands with a small market share spend
proportionally more for advertising and sales
promotion than those with a large market
share.
 Beyond a certain level of spending, diminishing returns
set in.
 New brands require higher spending to reach a
minimum level of exposure needed to affect purchase
habits.
The Effects of Advertising
on Consumers
 The average U.S. citizen
is exposed to hundreds
of ads each day.
 Advertising may change
a consumer’s negative
attitude toward a
product, or reinforce a
positive attitude.
 Advertising can affect consumer
ranking of a brand’s attributes.
Effects of Advertising
Major Types of Advertising
Institutional
Advertising
Corporate identity
Advocacy
advertising
Pioneering
Product
Advertising
Competitive
Comparative
Product Advertising
Pioneering
 Stimulates primary demand for new
product or category
 Used in the PLC introductory stage
Competitive
 Influences demand for brand in the
growth phase of the PLC
 Often uses emotional appeal
Comparative
 Compares two or more competing
brands’ product attributes
 Used if growth is sluggish, or if
competition is strong
Online
The Major Types of Advertising
Creative Decisions in Advertising
Advertising
Campaign
A series of related
advertisements focusing on a
common theme, slogan, and set
of advertising appeals.
Creative Decisions in Advertising
Determine the
advertising objectives
Make creative decisions
Make media decisions
Evaluate the campaign
Setting Objectives:
The DAGMAR Approach
Define target audience
Define desired percentage change
Define the time frame for change
Creative Decisions
Identify product benefits
Develop and evaluate advertising appeals
Execute the message
Evaluate the campaign’s effectiveness
Identify Product Benefits
 “Sell the Sizzle, not the Steak”
 Sell product’s benefits,
not its attributes
 A benefit should answer
“What’s in it for me?”
 Ask “So?” to determine
if it is a benefit
Product Attributes Vs Benefits
Attribute
“Powerade’s new line has been
reformulated to combine the scientific
benefits of sports drinks with
B vitamins and to speed up energy
metabolism.”
- So?
Benefit
“So, you’ll satisfy your thirst with a
great-tasting drink that will power you
throughout the day.”
Advertising Appeals
Profit
Product saves, makes, or protects money
Health
Appeals to body-conscious or health seekers
Love or romance
Used in selling cosmetics and perfumes
Fear
Social embarrassment, old age, losing health
Admiration
Reason for use of celebrity spokespeople
Convenience
Used for fast foods and microwave foods
Fun and pleasure
Key to advertising vacations, beer, parks
Vanity and egotism
Used for expensive or conspicuous items
Environmental
Consciousness
Centers around environmental protection
Unique Selling Proposition
Unique Selling
Proposition
A desirable, exclusive, and believable
advertising appeal selected as the
theme for a campaign.
Executing the Message
Scientific
Slice-of-Life
Musical
Lifestyle
Spokesperson/
Testimonial
Demonstration
Mood or
Image
Fantasy
Real/
Animated
Product
Symbols
Humorous
Creative Decisions for Ad Campaign
Set
advertising
objectives
Identify benefits
Develop appeal
Evaluating
results helps
marketers
adjust objectives
for future
campaigns
Execute
message
Evaluate
campaign results
Major Advertising Media
Newspapers
Magazines
Radio
Television
Outdoor Media
Yellow Pages
Internet
Newspapers – 2009 Demise of Majors!!
Advantages
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Geographic selectivity
Short-term advertiser
commitments
News value and immediacy
Year-round readership
High individual market
coverage
Co-op and local tie-in
availability
Short lead time
Disadvantages
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Limited demographic
selectivity
Limited color
Low pass-along rate
May be expensive
Cooperative Advertising
Cooperative
Advertising
An arrangement in which the
manufacturer and the retailer
split the costs of advertising
the manufacturer’s brand.
Magazines – 2009 Circulation Decline
Advantages
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Good reproduction
Demographic selectivity
Regional/local selectivity
Long advertising life
High pass-along rate
Disadvantages
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Long-term advertiser
commitments
Slow audience build-up
Limited demonstration
capabilities
Lack of urgency
Long lead time
Radio – Great for Local markets
Advantages
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Low cost
Immediacy of message
Short notice scheduling
No seasonal audience
change
Highly portable
Short-term advertiser
commitments
Entertainment carryover
Disadvantages
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No visual treatment
Short advertising life
High frequency to
generate comprehension
and retention
Background distractions
Commercial clutter
Television – 2009 Viewership Down
Discuss New Mode of TV viewing – Online: Hula, Youtube, etc
Advantages
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Wide, diverse audience
Low cost per thousand
Creative opportunities for
demonstration
Immediacy of messages
Entertainment carryover
Demographic selectivity
with cable
Disadvantages
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Short life of message
Consumer skepticism
High campaign cost
Little demographic
selectivity with stations
Long-term advertiser
commitments
Long lead times for
production
Commercial clutter
Outdoor Media
New Electronic Billboards
Advantages
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Repetition
Moderate cost
Flexibility
Geographic selectivity
Disadvantages
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Short message
Lack of demographic
selectivity
High “noise” level
Internet
Most Effective Reaching Youth
Advantages
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Fast growing
Ability to reach narrow
target audience
Short lead time
Moderate cost
Disadvantages
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Difficult to measure ad
effectiveness and ROI
Ad exposure relies on
“click through” from
banner ads
Not all consumers have
access to Internet
Alternative Media
Shopping Carts
Floor Ads
Computer
Screen Savers
Subway
Tunnel Ads
DVDs
Video Game Ads
Interactive Kiosks
Cell Phone Ads
Ads in Movies
Advertainments
Videogame Advertising
 Microsoft plans to acquire Massive inc., a
start-up that places ads in video games.
 Ads are inserted into the game
environment.
 Video games could become
a large new medium for
advertising.
SOURCE: Robert A. Guth and Nick Wingfield,
“Microsoft’s ‘Massive’ Move into Game Ads,” Wall
Street Journal, April 26,2006, B1.
Directory Assistance Advertising
 Companies are offering free telephone directory
assistance—but there’s an advertisement first.
 The audio ads are narrowly targeted,
to 12 seconds.
 The growth of such free services
represent another change
industry.
 Dial 1-800-FREE411 or
411-METRO
SOURCE: Rebecca Buckman, “Your
Listing, and a Word From Our Sponsor,”
Wall Street Journal, April 20,2006, B1.
and are 10
could
in the telecom
1-800-
Media Scheduling on the Web
 Competition for Web advertising
driving up prices.
spots is
 Some Web advertisers now run
on time of day.
Examples:
campaigns based
● McDonald’s: breakfast meals
hours
● Xerox: copier ads during the workday
● Budweiser: beer ads on Friday afternoons
during morning
 Scheduling Web ads during prime times is a more efficient
use of ad dollars and more targeted.
SOURCE: David Kesmodel, “More Marketers Place Web Ads
by Time of Day,” Wall Street Journal, June 23, 2006, B1.
Public Relations
Public
Relations
The element in the promotional
mix that:
 evaluates public attitudes
 identifies issues of public concern
 executes programs to gain public
acceptance
 E.g. McDonald’s: Healthy Meals – In
response to Fast Food Nation
Types of Public Relations Activities
Press relations
Product publicity
Corporate communication
Public affairs
Lobbying
Employee and investor relations
Crisis management
Public Relations Tools
New product publicity
Product placement - movies
Consumer education
Event sponsorship
Issue sponsorship
Internet Web sites
Example of Consumer Education
 Corporations are teaching public school students about
personal finance.
 People under age 25 are a fast-growing group for credit
card debt increases and bankruptcy.
 Is it appropriate to use
materials with corporate
identity?
 How should financial literacy
SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank,”
Wall Street Journal, April 8-9, 2006, B1.
educational
a corporate
be taught?
Managing Unfavorable Publicity
The Exxon Valdez Incident
Crisis
Management
A coordinated effort to handle the
effects of unfavorable publicity or
of an unfavorable event.
The Role of Public Relations